The Gujarat High Court, in a judgement (see below) on December 27, 2019, said that Permanent Account Number (PAN) not yet linked with Aadhaar will not be declared inoperative for the purpose of filing income tax returns, since the validity of the Aadhaar Act being introduced as a Money Bill has not yet “attained finality” in front of the Supreme Court.

A division bench of Justices Harsha Devani and Sangeeta K. Vishen pronounced the judgement in a case where Bandish Saurabh Soparkar had moved the High Court against the Union of India, Central Board of Direct Taxes, and Deputy Commissioner of Income Tax, seeking that he should not be held liable for not linking his Aadhaar with PAN. The division bench held:

“…the applicant needs to be protected by directing that his PAN shall not be declared inoperative and the applicant may not be subjected to the proviso to sub-section (2) of section 139AA of the [Income Tax] Act till the judgment of the Supreme Court in Rojer Mathew v. South Indian Bank Ltd. is delivered and available. In the opinion of this court, grant of such interim relief in favour of the applicant can in no manner have wide repercussions as is sought to be contended on behalf of the revenue”.

In November 2019, a five-judge bench of the Supreme Court had referred the passage of Finance Act 2017 as a money bill, to a larger seven-judge bench, raising concerns over the correctness of the Aadhaar judgement of 2018. Also, according to Section 139AA of the Income Tax Act, every person who has PAN as on July 1, 2017 is required to link his/her PAN with his/her Aadhaar number. If the PAN is not linked by Aadhaar by a date to be notified by the government then PAN would become invalid. The current deadline to link PAN with Aadhaar is March 31, 2020.

What if the SC holds against Aadhaar Act being introduced as Money Bill? The division bench said that if the seven-judge bench of the Supreme Court holds that the Aadhaar Act could not have been introduced as a Money Bill, section 139AA of the Act would be rendered redundant. If that were to happen, “the claim of privacy of the applicant would be lost for all times to come,” the division bench held.

“This is the law of the land”: IT department

‘Enrolling for Aadhaar once will create an irreversible situation,’ said the petitioner: Senior Advocate SN Soparkar, representing the petitioner, had argued that the applicant had a prima facie case for non linkage of PAN and Aadhaar simply because a larger Bench of the Supreme Court was yet to decide the validity of the Aadhar Act. Soparkar further claimed that “once the applicant reveals the biometrics and other information that he would be required to provide to enroll for Aadhaar, an irreversible situation would be created”. Demanding to be excused from the “evil effects” of section 139AA of the Income Tax Act, he further said that the petitioner would also face financial and criminal consequences for the same. Soparkar had also urged the High Court to declare the linking of PAN and Aadhaar as unconstitutional, however, the division bench held that since section 139AA of the Income Tax Act had already been upheld by the Supreme Court, the challenge to its constitutional validity failed.

‘This is the law of the land,’ IT department’s retort: Senior Advocate MR Bhatt, who was representing the Deputy Commissioner of Income Tax, said that the 5 judge bench of the Supreme Court had taken into account all the facets of section 139AA of the Income Tax Act. He argued that “this is the law of the land and has to be abided by,” and the reference to a larger bench has been made only on the question of the Money Bill. “Once a provisions of section 139AA of the [Income Tax] Act have been upheld, the High Court ought not to stay the operation thereof,” he argued.

“…the State is entitled to recover dues based on the existing statutory provisions and granting any relief to the applicant would tantamount to granting stay against the operation of the Supreme Court decision. Moreover, granting any relief to the applicant would have wide repercussions in the entire country.” — Senior Advocate MR Bhatt [emphasis ours]